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High Court of New Zealand Decisions |
Last Updated: 11 August 2013
PURSUANT TO S 35A OF THE PROPERTY (RELATIONSHIPS) ACT `1976, ANY REPORT OF THIS PROCEEDING MUST COMPLY WITH SS 11B TO
11D OF THE FAMILY COURTS ACT 1980.
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2012-485-1526 [2013] NZHC 557
BETWEEN J Appellant
AND P
First Respondent
J and ANOTHER as trustees of A TRUST Second Respondent
CIV 2012-485-1527
BETWEEN J and ANOTHER as trustees of A TRUST Appellants
AND P Respondent
Hearing: 13 December 2012
Counsel: S H Ambler for J
A Galbraith for the Trustees
D Hollings QC for P Judgment: 20 March 2013
JUDGMENT OF MALLON J
J v P [2013] NZHC 557 [20 March 2013]
Contents
Introduction ....................................................................................................................................... [1] Preliminary issue ............................................................................................................................... [3] Jurisdiction ..................................................................................................................................... [3] Nature of appeal ............................................................................................................................. [7] Discretion ....................................................................................................................................... [7] Background........................................................................................................................................ [7] Discovery .......................................................................................................................................... [20] Power to order discovery ............................................................................................................. [20] The Family Court decision ........................................................................................................... [23] What has been discovered? .......................................................................................................... [29] Application premature? ................................................................................................................ [31] Need for transparency .................................................................................................................. [32]
P’s rights to trust documents as a beneficiary .............................................................................. [34] The Court’s power under s 44B of the PRA .................................................................................. [36] Distinction between J’s assets, the Trust’s assets, and the assets of companies in which the Trust
has an interest............................................................................................................................... [37] J’s objection to scope of discovery................................................................................................ [39] The trustees’ objection to scope of discovery ............................................................................... [40] P says scope of documents sought is appropriate ........................................................................ [42] My assessment of relevance.......................................................................................................... [44] Was a staged approach to discovery wrongly rejected? ............................................................... [46] Dates over which discovery should be provided........................................................................... [51] Item 1 (bank statements)............................................................................................................... [53] Item 2 (tax returns and annual accounts) ..................................................................................... [59] Item 3 (employment) ..................................................................................................................... [64] Item 4 (Property notes etc) ........................................................................................................... [66] Item 5 (land purchases) ................................................................................................................ [74] Item 6 (chattels) ............................................................................................................................ [76] Item 7 (debt/mortgages) ............................................................................................................... [79] Item 8 (tax credits)........................................................................................................................ [83] Item 9 (company current accounts) .............................................................................................. [87] Item 10 (overdrafts/loans) ............................................................................................................ [91] Item 11 (shares) ............................................................................................................................ [95] Item 12 (disposition to third parties) .......................................................................................... [100] Item 13 (disposition to trusts) ..................................................................................................... [104] Item 14 (disposition to qualifying trusts)) .................................................................................. [106] Item 15 (trust documents) ........................................................................................................... [108] Item 16 (trust structure)...............................................................................................................[112] Item 17 (work for trusts) .............................................................................................................. [114] Item 18 (alternative separation date) ..........................................................................................[116] Overall approach.........................................................................................................................[118]
Affidavit objections ........................................................................................................................[119] Result .............................................................................................................................................. [124]
Introduction
[1] P has commenced relationship property proceedings against J, to which the trustees (one of which is J) of a trust (“the Trust”) are joined. P has also applied for maintenance from J. The matter is before me because J and the trustees appeal against the Family Court’s decision ordering extensive discovery from them in relation to those proceedings.1 The appeal is on the basis that the discovery extends well beyond documents that could be relevant, is unnecessary and will be onerous.
[2] There is also an appeal by J against the Family Court’s decision declining to strike out some matters referred to in affidavits by P, which concern the circumstances in which P and J’s relationship came to an end and alleged misconduct by J. J contends that those matters are irrelevant and unfairly prejudicial and the Judge was wrong not to strike them out.
Preliminary issue
Jurisdiction
[3] The first issue is the High Court’s jurisdiction to hear appeals against
interlocutory matters of this kind. Section 39 of the Property (Relationships) Act
1976 (“the PRA”) confers a right of appeal in relationship property proceedings in
these terms:
39 Right of appeal to High Court
(1) This subsection applies to a decision of a Family Court or District
Court, in proceedings under this Act, to— (a) make or refuse to make an order; or (b) dismiss the proceedings; or
(c) otherwise finally determine the proceedings.
(2) A party to proceedings in which there is made a decision to which subsection (1) applies, or any other person prejudicially affected by the decision, may appeal to the High Court against the decision.
1 [P] v [J] [citation omitted].
(3) The High Court Rules and sections 74 to 78 of the District Courts Act 1947, with all necessary modifications, apply to an appeal under subsection (2) as if it were an appeal under section 72 of that Act.
...
[4] This has been interpreted as excluding interlocutory orders. As it was put in
Dunsford v Shanly:2
That section confers a right of appeal in respect of orders finally determining proceedings under the Act. While paragraph (a) is not, on the words of that paragraph, limited to orders which finally determine some substantive right of the parties, the use of the word “otherwise” in paragraph (c) makes it clear that paragraph (a) extends only to the making of an order, or the refusal to make an order, which has the effect of finally determining the proceedings. Interlocutory orders are not included.
[5] There is High Court authority that the right of appeal from interlocutory decisions arises under s 72 of the District Courts Act 1947.3 That section provides:
72 General right of appeal
(1) This subsection applies to every decision made by a District Court other than a decision of a kind in respect of which an enactment other than this Act—
(a) expressly confers a right of appeal; or
(b) provides expressly that there is no right of appeal.
(2) A party to proceedings in a District Court may appeal to the High Court against the whole or any part of any decision to which subsection (1) applies made by the District Court in or in relation to the proceedings.
[6] If s 39 of the PRA does not confer a right of appeal in respect of interlocutory orders, I agree that it is conferred by s 72 of the District Courts Act. That is because an interlocutory decision is not a “decision of a kind” in respect of which the PRA expressly confers a right of appeal, and nor does that Act expressly provide that there
is no right of appeal against decisions of that kind.
2 Dunsford v Shanly [2012] NZHC 257 at [7].
3 E & HH Ltd v E [2005] NZFLR 806 (HC) at [40]; SMG v EWG [2007] NZFLR 27 (HC) at [11]- [12]. In Dunsford v Shanly the Judge considered it was arguable that there was no right of appeal but decided to follow the authorities which had determined that there was a right of appeal.
Nature of appeal
[7] The next question is whether:
(a) the Austin, Nichols & Co Inc v Stichting Lodestar approach applies to the appeal whereby the appellate court reaches its own view on the merits;4 or
(b) the appeal is from the exercise of a discretion so the decision may only be set aside if there has been an error of law or principle, the taking into account of irrelevant considerations, a failure to take into account relevant considerations or the decision is plainly wrong.5
[8] In response to a query raised by me about this at the hearing, counsel for the trustees was content to proceed on the basis that they should succeed because the Family Court’s decision on discovery was plainly wrong. Counsel for J took a similar view about the appeal on the decision not to strike out parts of P’s affidavit. In submissions filed after the proceeding counsel for J submits that s 72 confers a general right of appeal and that therefore the Austin, Nichols approach applies.
[9] However it does not follow from the terms of s 72 that the Austin, Nichols approach applies. Although s 72 confers the right of appeal, the approach on appeal depends upon the nature of the decision against which the appeal is brought. A discovery order under the Family Court Rules 2002 is discretionary.6 Similarly, the admissibility of evidence in proceedings under the PRA is a matter of discretion.7
Therefore the proper approach to the appeals here is the second of the two
approaches set out above.
4 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
5 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
6 Family Court Rules 2002, r 141(2A). Radisich v Taylor HC Auckland CIV-2007-404-3276, 23
March 2009 at [3]. Similarly, in the context of civil proceedings, see Todd Pohokura Ltd v Shell
Exploration NZ Ltd [2009] NZCA 561 at [30].
7 Property (Relationships) Act 1976, s 36. See also Family Court Rules 2002, r 158(2).
Discretion
[10] Although there is jurisdiction to hear an appeal, there is also a discretion to decline to do so. This discretion may be exercised where the Court considers that the interlocutory ruling may be overtaken by the trial or the appellant is unlikely to be prejudiced by postponing any appeal until after the substantive hearing.8 That is not the case here in relation to the discovery appeal. If the discovery order was too wide-ranging and unnecessarily onerous, that is not something that will be overtaken
by the trial or able to be appealed after trial. The appeal against the decision not to strike out some parts of the evidence is, however, something that might fall into that category. I discuss this further below.
Background
[11] P and J were in a relationship between 1998 and 2009. They lived together and had three children. When the relationship came to an end, P and the children moved to Auckland. They initially lived with family members and then lived in rented accommodation. In April 2010 P and the children moved into a property purchased by the Trust.
[12] During their relationship they enjoyed a multimillionaire’s lifestyle. Financial decisions were made by J and P had very little knowledge of them. P’s understanding is that J’s overall net worth increased dramatically during their relationship. She says that when they first met in 1998 J was worth about $50 million, but by 2009 this had increased to $200 million and it is now in the vicinity of $400 million.
[13] However J’s affirmation of assets and liabilities filed for the purposes of the relationship property proceeding lists J’s assets at considerably less than this. That affirmation lists J’s principal assets as an amount of $29.5 million owing to J by the Trust and a further amount of $10 million owing to J by “THL”, a company indirectly owned by the Trust. Both these amounts are said to be separate property
as are two apartments in Sydney. As relationship property, J’s affirmation listed an
8 Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309 at [32]. In this decision the Supreme Court overruled a line of authorities that limited the kinds of interlocutory decisions that could be appealed.
estimated $10,000 to $15,000 of household chattels (excluding art) and $2,000 in a bank account. The affirmation said that the only income after separation was $4,000 per annum from the Government Library Fund.
[14] The Trust was created in 1993 (that is, several years before the relationship commenced). The trustees are J and a corporate trustee (“YHL”). The discretionary beneficiaries include J, P, previous spouses of J, J’s nine children (including the three from his relationship with P), siblings and other individuals related to J. Since it was created, the Trust has owned J’s principal residence in Wellington. It also owns other properties which are occupied by discretionary beneficiaries. Its primary investments are shareholdings in a number of property holding companies.
[15] The Trust’s interests are held in a corporate entity, “TNL”, in which J holds one share and the trustees hold the remaining 99 shares. TNL has 100 per cent shareholdings in at least eight companies (including THL) and smaller shareholdings in other companies. In turn, a number of those entities have interests in other entities. Some of these entities are Australian. Other individuals have interests in some of them. A wire diagram has been provided to the Court which shows the wide extent of the investments and their complicated structure.
[16] P has sought disclosure of financial information since October 2009. Despite a number of requests only limited information about the Trust was forthcoming. In the face of no progress in resolving relationship property matters with J, P filed an application dated 19 December 2011 under the PRA. That application sought orders:
1. Determining shares in relationship property.
3. Determining entitlements arising from contributions to or sustenance
of the first respondent’s separate property.
4. Awarding compensation for economic disparity.
6. For maintenance.
7. For child support.
[17] These orders were sought pursuant to ss 9A, 15, 15A, 17, 18, 18B, 18C, 22,
25, 26, 30, 31, 32, 33, 44(1) and 44C of the PRA.
[18] This application was accompanied by an application for discovery also on
19 December 2011. The application included a schedule which itemised the categories of documents being sought. Some discovery was offered in March and May 2012 but the scope of that discovery was considerably less than what was being sought.
[19] By application dated 26 March 2012, J applied to strike out parts of affidavits filed by P in relation to the proceedings. This application, together with the application for discovery, were the subject of a hearing in the Family Court on
25 May 2012. The Family Court judgment was given on 3 July 2012.
Discovery
Power to order discovery
[20] The Family Court’s power to order discovery is under r 141 of the Family Court Rules. Under that rule a party can apply for discovery of documents that “are, or have been, in the possession of another party to the proceedings” and that “relate to a matter in question in the proceedings”.9 The applicant for discovery must file an affidavit specifying “the extent of the discovery required” and “the reasons for the discovery”.10 There is no further guidance in the rule as to when the Family Court should make a discovery order on such an application, and if it does, the extent of
the order that should be made.
9 Family Court Rules 2002, r 141(1).
10 Rule 141(2A).
[21] There is no dispute between the parties that the discovery sought must be:11
(a) relevant to the issues in the proceeding;
(b) reasonably necessary at the time it is sought; and
(c) not unduly onerous.
[22] In determining the appropriate scope of discovery there is also authority to the effect that:12
(a) relevance is likely to be approached robustly and at a greater level of generality in relationship property proceedings than in civil proceedings where issues are more precisely pleaded;
(b) sometimes wide-ranging discovery will be necessary; and
(c) there is a need for “complete transparency” in relationship property
disputes.
The Family Court decision
[23] One of the issues was the period over which the discovery should extend. J submitted that it should be limited to documents from the start of the relationship and until the separation date. The Family Court rejected that, stating:13
I find that in all category of documents to be discovered save where expressly stated the period of discovery should be from the beginning of the relationship in 1998 to the present date. I reject the submission that there was a basis for limiting discovery to separation date 2009. The presumption in the Act is that each parties’ relationship property entitlement is assessed at hearing date, including that arising from direct or indirect contributions to separate property, and any dispositions under s 44, 44C and 44F of the Act. It is a movable feast as Ms Ambler submits but that is not a sound argument for limiting discovery to separation date. Discovery must be given to the present date.
12 Again, the parties referred to MAC v MAC which also sets out authority for these points.
13 [P] v [J], above n 1, at [46].
[24] On the topic of the relevance of Trust documents the Judge said this:14
I accept Ms Hollings QC submissions that the second respondent’s status as a Trust does not put it in a different category. The trustees have withdrawn their objection to the Trust being joined as a party because the Trust is one of the vehicles through which [J] manages his financial affairs, and from which he has personal resources. The PRA specifically provides for discovery of information regarding dispositions of property to a Trust (s 44B PRA). The argument here goes further than dispositions of property to the Trust and debts back to the first respondent. The applicant’s claim extends to increases in value of separate property, sustenance (S 9A/ s 17) and potentially a constructive trust claim based on contributions during the relationship.
[25] On the topic of the discovery being onerous the Judge said this:15
In this case discovery is likely to be large as a consequence of [J’s] business structure. Provided that the documents sought are relevant and are likely to have probative value a complicated business structure should not inhibit discovery.
[26] The Judge said that:
(a) The discovery sought was intended to capture “any entity in which [J] is involved including any company in the wiring diagram of companies associated with the Trust”.16
(b) P claims that she has contributed directly and indirectly to the growth
in J’s “property portfolio, business interests and overall wealth.”17
(c) “[J’s] property portfolio is held in a complex structure of interlinked companies that in turn are linked to the Trust and the key companies that [J] has a legal and beneficial interest in”.18
(d) To assess P’s claim and quantify her entitlement “complete transparency is necessary”.19
14 At [32].
15 At [31].
16 At [48].
17 At [49].
18 At [50].
19 At [51].
[27] The Judge then went through various categories of documents. She concluded:20
I find that discovery as sought by the applicant is justified in this case. The documents sought are relevant to enable Ms Hollings to assess the applicant’s entitlement under the Act, and ultimately for the Court to determine if that is required. The fact that wide discovery is necessary is a consequence of the complex company and Trust structure through which [J] runs his property business in New Zealand and Australia, and I find that wide discovery cannot be avoided in this case. Furthermore an order for discovery is necessary because the applicant has been seeking discovery since late October 2009, over two and a half years. It is inconsistent with principle 1N of the Act and the authorities to delay comprehensive discovery or to approach discovery in a piecemeal fashion. There will need to be some limits once the first and second respondents have provided the affidavit documents and discovery that is in the first and second respondent’s possession or control. The parties are represented by senior and experienced counsel who will undoubtedly approach this with common sense.
[28] The Family Court concluded by making orders in the terms sought in P’s
application.
What has been discovered?
[29] Following the Family Court decision, J and the Trust have now provided (or are prepared to provide) the following categories of documents itemised in P’s application (the item numbers correspond to the numbers in P’s application):21
Documents relating to identification and classification of relationship property
...
20 At [74].
21 J and the trustees had separate representation. The submissions for J on some of those categories of documents were different from what was advanced on behalf of the trustees.
22 The application (and therefore order) sought discovery of all categories of documents up to “the present date”. J and the trustees say that at this stage they should only have to provide discovery up to the date of separation.
...
8. All documentation in regard to tax credits held by J or the trust as at
[July 2009].
9. Documentation in regard to all current accounts in J’s name in any
companies from 1998 to separation date.
2009]:
(a) all documents relating to the acquisition of shares by J
including the source of any consideration paid;
(b) copies of any shareholder agreements; (c) details of all shareholder loan accounts; (d) most recent property and asset valuations;
(e) financial performance (to profit after tax level);
(f) financial performance (formerly called a profit and loss statement) including any consolidated statement but with results for subsidiaries/divisions also supplied; preferably ensuring that gross profit, depreciation, interest and profit before tax is split out.
[but not including shares held by TNL.]
Documents relating to sections 44, 44C, 44F Property (Relationships) Act claims
15. In regard to the Trust:
(a) Copies of all trust deeds and any deeds of variation.
(b) Copies of all deeds appointing all previous and present trustees.
...
(d) Financial statements for the years from the establishment of the Trust from 1998 onwards through to [July 2009].
...
Documents relating to potential constructive trust claim
17. All documents relating to or evidencing work done by P or J carried out for the Trust or entities associated with or owned by the Trust.
Alternative separation date
18. If J contends for a separation date which is different from July 2009 then the same documents in regard to that alternative separation date mirroring the documents listed above are also requested.
[30] The issues are whether the other items in P’s application should be
discovered and whether discovery should extend beyond the separation date of July
2009.
Application premature?
[31] J submits that the discovery application was made prematurely and without a supporting affidavit setting out the reasons why the documents were relevant. J submits that this meant that the Judge was not in a position to determine that the discovery was reasonably necessary. I reject this submission. By the time of the Family Court hearing, consideration of the discovery application was not premature. By this time J’s defence had been filed and both parties had filed a number of affidavits. The Family Court Judge was in a position to make decisions as to the categories of documents that should be discovered.
Need for transparency
[32] P submits that the recognised need for transparency in relationship disputes, and the need to assess relevance at a higher level of generality, mean that in appropriate cases, particularly where assets are held in trusts and companies, wide-ranging discovery will be appropriate and necessary.
[33] I accept, as a general statement, that wide discovery may sometimes be appropriate and necessary (to ensure the parties have access to all the relevant documents), but the appropriate scope of discovery in a particular case will still be determined by relevance and reasonable necessity. The need for transparency is not a justification for ordering onerous discovery which is unnecessary for the disposition of the claims. A balance must be struck between the need for transparency (i.e. so that, where there is asymmetry of knowledge, a party obtains relevant information) and applications seeking wide-ranging information which are “fishing” in the hope that something of use may be uncovered. That balance is achieved by limiting discovery to what is reasonably necessary at the time the discovery is sought. In my view the Judge erred in so far as she relied on transparency as justifying onerous discovery beyond that which was shown to be reasonably necessary.
P’s rights to trust documents as a beneficiary
[34] P submits that, as a beneficiary, she has a right to disclosure of information about the Trust irrespective of the present proceedings. On this topic, P refers to Foreman v Kingstone.23 That case concerned a claim against the trustees by discretionary beneficiaries under a trust, in respect of which orders for disclosure of documents relating to the trust were sought. The High Court held that the discretionary beneficiaries were entitled to receive information that would enable
them to ensure the trustees’ accountability in terms of the trust deed. In this category were the trust’s financial statements (including details of all distributions of capital, income and settlements and details of the assets and liabilities of the trust) and details of past and present trustees and any variations to the terms of the trust. They were not entitled to the trustees’ reasons for distributions made, nor to matters relating to the management of the trust property which were within the discretion and powers of the trustees.
[35] The case supports P’s entitlement to the Trust’s financial statements, which
the Trust has (or is prepared to) disclose. It does not support an entitlement to information in respect of entities beyond the Trust. P’s position as a discretionary
23 Foreman v Kingstone [2004] 1 NZLR 841 (HC).
beneficiary under the Trust does not therefore provide a basis for discovery of any wider scope than documents that are relevant to, and reasonably necessary for, P’s claims in this proceeding.
The Court’s power under s 44B of the PRA
[36] P refers to the Court’s power to order disclosure of “such information as the court specifies relating to the disposition of relationship property ... to a trust since ... the de facto relationship began”.24 However, to make such an order, the Court would need to be satisfied that the information is relevant and that it is necessary that it be disclosed. The existence of this power does not therefore assist with determining the appropriate scope of discovery in this case.
Distinction between J’s assets, the Trust’s assets, and the assets of companies in
which the Trust has an interest
[37] The trustees submit that the Family Court Judge conflated J’s assets, the assets of the Trust and the assets of the companies. They say that this led to oppressively wide orders which cannot be justified on the basis of any live issue in the Family Court. I agree that there are places in the judgment where the Judge’s description of J’s interests and wealth have been conflated with the Trust’s position. For example the Judge described J as having property interests in a portfolio of commercial and residential properties in New Zealand and Australia. Correctly speaking, those interests are all held (ultimately) by the Trust of which J is one of the two trustees and a beneficiary.
[38] The conflation was understandable. The wire diagram which was provided by J or the trustees was headed “[J] – Structure of Commercial Affairs”. Further, P’s evidence was to the effect that J is actively involved in these affairs and that he is able to and does direct how Trust assets are dealt with. Be that as it may (or may not be), the more important question is whether the Judge made oppressively wide
orders not justified on the basis of issues before the Family Court.
24 Property (Relationships) Act 1976, s 44B.
J’s objection to scope of discovery
[39] J submits that the Judge was wrong to conclude that discovery should extend to any entity in which J is involved or has any interest, whether beneficial or legal. It is said that the wide discovery was ordered to enable P to assess her claims, which will invite claimants in other cases to seek wide discovery because the documents “could” be relevant to a claim. It is said that here the wide discovery is oppressive.
The trustees’ objection to scope of discovery
[40] The trustees say that they have given (or will give) discovery of the relevant information about the Trust and TNL. They say that:
(a) The Trust’s assets are not relationship property. Therefore, of the claims presently made by P, the only the possible claim against the assets of the Trust is that made under s 44C of the PRA. That claim would relate to any dispositions which have been made to the Trust with the effect of defeating P’s rights under the PRA.
(b) Other claims relate to contributions to J’s separate property and sustenance of J’s separate property. Neither the Trust’s assets nor the companies in the wire diagram are J’s separate property.
(c) It is only through a constructive trust claim, which has not yet been made, that assets owned by the Trust could become part of the relationship property pool, or characterised as J’s separate property in that context and hence subject to the PRA.
[41] The trustees say that any such constructive claim would be for equitable relief against a third party and would need to be brought in the High Court if its value is greater than $200,000. They say that the effect of the Family Court’s decision is to require extensive discovery of documents relating to past and present assets of the Trust and of a host of companies owned by the Trust in advance of any such claim being formulated. They say that this would be an extraordinary waste of time and resources for all parties. They say that the documents that have been
provided are sufficient to enable P to bring whatever claim she wishes to bring and that additional discovery is not necessary in advance of a particularised constructive trust claim.
P says scope of documents sought is appropriate
[42] P submits that the information held by the Trust is relevant because:
(a) Distributions from the Trust, or payments on J’s behalf by the Trust, are a significant part of J’s income. J’s income, living standards and earning capacity are relevant to P’s claims under ss 15 and 15A of the PRA, P’s claim for maintenance under the Family Proceedings Act
1980 (“FPA”) and child support.
(b) The Family Court will need to determine if the Trust’s debt to J and a debt owed to J by THL (as referred to by the Trust’s solicitor) are relationship property or J’s separate property. Even if separate property, the Family Court will need to determine if P has any claims to the debts under ss 9A and 15A of the PRA. For that purpose, “it is necessary to have disclosure from the Trust, including in respect of companies it owns, particularly THL.”
(c) A claim under s 44C is not the only claim available in relation to a trust under the PRA. Section 44 empowers the Court to set aside a disposition of property made by one partner in a relationship in order to defeat the claims or rights of the other partner under the PRA. In addition, J’s bundle of rights and powers under the Trust and P’s interest as a discretionary beneficiary are property rights for the purposes of the PRA. Further, the Court has power to vary the terms of the Trust when making orders under ss 25 to 32 of the PRA, which is potentially relevant here because the Trust owns the house in Auckland in which P and the children live.
(d) P has signalled that following discovery she is likely to make a constructive trust claim in equity against the Trust. The claim would
be made on the basis that J and P made contributions to the Trust by taking steps which caused or contributed to an increase in the value of its assets, that they reasonably expected a return for their contributions and the value of the relationship property created is the difference between the net value of the Trust’s assets and the value which they would have had but for the contributions of J and P. It is also possible that a “sham trust” claim will be made. The Family Court has jurisdiction to hear any such claims, subject to the $200,000 jurisdictional limit.
[43] P submits that the wider information she seeks will enable P and the Court to “assess or trace the acquisition or disposition of relationship property and increase in value of separate property or claims in regard to the Trust over the relationship”. She submits that the Court will not be able to make effective orders without the “financial position of the trusts and associated companies”. She submits that the Court will also need “documents as to the running of the trusts”. She submits that without discovery the value of a constructive trust claim (and therefore the appropriate jurisdiction to hear it) will not be known. She submits that the corporate structures put in place by J should not limit the Trust’s discovery obligations. She also submits that it is only with the full discovery that is sought that the asymmetry of knowledge as between J and P can be rectified.
My assessment of relevance
[44] The appropriate scope of discovery depends firstly on relevance. Documents that may assist with identifying and valuing relationship property are relevant, as are documents that relate to any relationship property dispositions. Documents that relate to any disposition of relationship property to the Trust are therefore relevant. Documents that may assist with identifying and valuing J’s separate property are also relevant because P claims for any increase in the value of J’s separate property that is attributable to the application of relationship property or by her actions; and because P makes a claim for compensation for economic disparity. The Trust’s assets are not J’s separate property, but they are relevant to J’s financial position at least to the extent that he has access to them to finance his living expenses. The other entities in
the wire diagram are (ultimately) part of the Trust’s assets. The Trust’s assets are also relevant because P intends to claim that J and P made contributions to the Trust’s assets, which increased their value, in circumstances where a constructive trust arises.
[45] On the basis of relevance alone, discovery might be ordered in respect of all the entities on the wire diagram. That is because they will provide information about assets which, through various structures, the Trust has an interest. That asset position is relevant both to assessing J’s financial position (at least to the extent he has access to those assets) and the proposed constructive trust claim. Although such discovery would meet the test of relevance, it would also be onerous, as the Judge really accepted. That raised for consideration whether all of that discovery was reasonably necessary at the time that it was being sought, bearing in mind that the claims made in respect of J’s separate property and in respect of the Trust’s assets were at an early stage. One possibility for ensuring that the discovery sought was reasonably necessary was to take a staged approach to discovery.
Was a staged approach to discovery wrongly rejected?
[46] J and the trustees say that the Judge was wrong to reject a staged approach to discovery. J submits that the proper approach was for there to be voluntary disclosure of information following which the scope of the proceedings would become defined. After that a discovery order might be sought if a party was not satisfied with the voluntary disclosure. That order would be made in respect of the relevant issues. Further discovery orders could also be made if necessary.
[47] The time for relying on voluntary disclosure had, however, passed. P had been seeking information over a long period prior to the commencement of the proceedings. She was essentially “fobbed off” through correspondence that was not replied to over lengthy periods. That was the reason that the Family Court Judge rejected staged discovery. She rejected what she described as “piecemeal” discovery because J and the Trust had resisted discovery over a long period. She considered that piecemeal discovery was inconsistent with “principle 1N of the Act and the authorities”.
[48] I accept that J and the Trust did resist discovery over a long period. That has not assisted in the inexpensive, simple and speedy resolution of the matter. On the other hand, the wide-ranging discovery ordered seems to run counter to that principle as well. At least up until the Family Court’s decision J and the trustees have sought to provide too little information, and P was seeking too much. The focus needed to be on the documents that would present an accurate position of the relationship property, J’s financial position, and the Trust’s financial position at the relevant time and any relevant dispositions of property.
[49] In my view this is a case where staged discovery is appropriate and the Judge erred in rejecting it. There is a need for some caution in ordering wide-ranging and onerous discovery, especially when the claims that may be pursued are in their early stages (and the foundation for them may not yet be made out). Discovery should be ordered of the documents that are central to providing an accurate financial position of both J (against whom orders are sought) and the Trust (in respect of which orders are sought or contemplated). Discovery of the documents that will provide that accurate position meets the need for transparency. Discovery of documents extending to all the entities in the wire diagram is unnecessary and onerous at least at this stage. It should not be ordered unless and until there is a basis for contending that the Trust’s financial position may not be accurately set out in its accounts, or there is basis for suggesting that relationship property dispositions may have been made to entities other than the Trust, or that J’s financial position is not accurately represented by the information disclosed.
[50] The Trust and J say that the discovery it has now provided is sufficient for this purpose. It is unclear to me whether that is so. As I understand it, at least as at the time of the hearing before me, there has not yet been analysis of what has been provided to identify where the information is inadequate and whether further inquiries are needed. Such analysis, then potentially leading to discovery of further categories of documents, is consistent with the new discovery rules in the High Court Rules, which contemplate staged discovery and have an emphasis on proportionality. The PRA context does not preclude such an approach. It is the approach which is appropriate in this case.
Dates over which discovery should be provided
[51] J and the trustees submit that discovery should not have extended to documents from separation to the present date. Ordinarily, where discovery is of narrow scope, it may be appropriate to order discovery up to the present date (with updated discovery up to the hearing date) given the presumption that relationship property entitlements are assessed as at the hearing date. However in the present case the discovery sought is wide. The date of separation was some time ago. If discovery is ordered up to the present date, that is another nearly four years of documents to be discovered. To order discovery of all documents in the relevant categories up to the present date may be unnecessary and potentially oppressive. The Judge did not consider the relevant date to which discovery should be given with this in mind.
[52] In my view, the central relevant documents (such as the Trust’s, TNL’s and THL’s annual accounts) should be provided up to the present date. For documents whose relevance may be less clear the preferable approach is to limit the scope of the discovery. For some categories of documents an appropriate limit may be the date of separation. There can then be updated discovery of particular categories of documents, which are better assessed once the relevance of those categories is more defined. With this approach in mind I turn to consider the particular items of discovery sought.
Item 1 (bank statements)
[53] The requested discovery under this heading is:
1. Copies of bank statements in the name of [J] and [the Trust]
including accounts held jointly or with other parties from August
1998 to the present time.
[54] The Family Court Judge said that “[w]here the bank statements exist they should be provided”.25 She did not specifically address the question of whether
these documents were reasonably necessary. As discussed above, I consider that the
25 [P] v [J], above n 1, at [53].
Judge was in error in not considering whether discovery of bank statements was reasonably necessary.
[55] J objects to disclosing his bank statements on the basis that his tax returns set out his income each year for the period of the relationship. P says that the tax returns indicate a negligible income, whereas the evidence indicates his financial resources are considerably greater. The evidence is that J’s living expenses are met by the Trust and those payments are made in reduction of the debt the Trust owes to him. P submits that J’s bank statements are necessary to determine J’s true financial position and income.
[56] As I understand it, the Trust does not operate a bank account. It is therefore unclear to me from which entity J receives payments and therefore which entities have bank accounts in respect of which the bank statements might be relevant. But even if there are bank statements which are potentially relevant, it is not necessary to discover them if all the relevant information is included in the financial accounts of the Trust (and, if necessary, entities owned by the Trust).
[57] Since making the request for these documents, the Trust has provided (or has said that it will provide) discovery of the Trust’s financial accounts. As discussed below, the annual financial accounts of TNL (and potentially other entities owned by the Trust) are to be discovered also. If, having reviewed the financial accounts of the Trust and any other relevant entities, P’s advisors have concerns that this does not provide adequate information as to J’s financial position, it may then be necessary for there to be discovery of J’s and TNL’s bank statements, or possibly the bank statements of some of the other entities (if relevant and reasonably necessary).
[58] At this stage, however, I consider that it is not necessary for J, the Trust and other entities to provide bank statements because the annual financial accounts which are to be discovered should provide an accurate record of payments made to J.
Item 2 (tax returns and annual accounts)
[59] The requested discovery under this heading is:
2. Tax returns and annual accounts where available from March 1998 to the present time in regard to [J] personally and all entities of which he has a shareholding or interest in (whether beneficial or legal), and [the Trust].
[60] J and the Trust have provided or will provide their tax returns and annual accounts for the period of the relationship. J and the trustees object to providing these documents for “all entities of which J has a shareholding or interest in (whether beneficial or legal).” They say that this is extraordinarily wide and the documents sought are irrelevant.
[61] The discovery sought under this item would potentially capture all the financial accounts of every entity on the wire diagram (that sets out all the interests held by entities owned by TNL, and in turn the Trust). It is not apparent why that is necessary and the Judge did not give reasons for requiring this (beyond the general points set out above). The Trust’s tax returns and annual accounts are relevant and are central to P obtaining an accurate picture of the value of the Trust’s assets over time, the payments made by the Trust to J over time, and dispositions made to or by the Trust over time.
[62] There should also be discovery of the tax returns or annual accounts of any other entities which make payments to J, or which has a debt owing to J, or to which J has made dispositions of property since the relationship began. That would include TNL (as the holding company) and THL (which has a debt owing to J). It may also include other entities in which TNL has interests. That is because there is some evidence that the Trust is not the conduit through which all payments are made. It does not have a bank account. P’s evidence is that the Inland Revenue Department have informed her that its records show that she was receiving salary payments from THL up until November 2009. She says that her bank records show that she is receiving maintenance payments from another entity ([J] Holdings Ltd, which is one of the companies that TNL owns 100 per cent). In these circumstances, if discovery is confined to the Trust’s annual accounts and tax returns, that may not give a full picture of the assets to which J has access.
[63] The annual accounts and tax returns are central documents. Any material assets acquired, held or disposed of, should be reflected in the accounts. Any
payments made to J should also be reflected in the accounts. They are also documents that should be relatively readily available. They are therefore not documents in respect of which it should be onerous to find and provide. I therefore consider that P should at least have discovery of the annual accounts and tax returns of J, the Trust, TNL and THL up to the present date. P should also have discovery of any other entities in which TNL has an interest and from which J receives any direct payments (i.e. which will not be shown in the accounts of the Trust, TNL or THL) up to the present date, or to which J has made dispositions during the period of the relationship.
Item 3 (employment)
[64] The requested discovery under this heading is:
3. All employment contracts or contracts for management services relating to [J] in existence from 1998 to the current time.
[65] J does not object to this category of documents. J’s objection is confined to discovering documents in this category beyond July 2009 (i.e. beyond the separation date). These documents are directly relevant to P’s claims to the extent that they show any income to which J has access. It is also unclear why discovery of these documents beyond July 2009 will be onerous. The submissions for J did not deal specifically with this category of documents. In these circumstances I cannot see any error by the Judge in ordering documents in this category up to the current time (with the possibility of further updating discovery being sought as well).
Item 4 (Property notes etc)
[66] The requested discovery under this heading is:
4. Sale notes and settlement statements for all property acquired or disposed of by [J] or any other entities to which he is involved or has any interest in whether beneficial or legal, including the [Trust], since August 1998.
[67] The Judge accepted that this category of documents was far reaching and could be unduly onerous. She noted that P wished to capture discovery of a valuable art collection held in residential property in Australia. She accepted it was possible
that “assets have been acquired or disposed of during the relationship by some of the companies that [J] has an interest in or control over”.26 She concluded that discovery as sought under this category should be given.
[68] J and the trustees say that the Judge was wrong to order discovery of this wide scope (which potentially, for example, covers Christmas presents). They say that it should be confined to:
(a) “real” property, rather than “all” property;
(b) J and the Trust, rather than “any other entities to which [J] is involved
or has any interest in whether beneficial or legal”; and
(c) documents up to July 2009.
[69] P responds that the reference to “sale notes and settlement statements” was intended to confine this category to legal transactions, and therefore material property transactions. Real property would therefore be within this category, but Christmas presents would not.
[70] However the term “sale note” is a broad one. For example it potentially covers any receipt of payment for any item purchased by J. In my view the Judge erred in permitting such wide discovery, which she accepted would be onerous. I consider that this category of documents needed to be confined to material acquisitions and disposals, especially as any such material transactions should be reflected in the financial accounts of the Trust, TNL and THL (or other entities if relevant – refer above).
[71] Real property acquired or disposed of is likely to be material and in respect of which there will be settlement statements. The other item specifically referred to by P was art work. For any material art acquisitions or disposals there are likely to be sale notes. At least at this stage, I consider that discovery in this category should be
confined to real property and art work acquired or disposed of by J or the Trust.
26 At [56].
[72] If P is able to specify other parameters which will identify any other kind of property acquisitions or disposals that are likely to be material (and which may not be within the other categories of documents discovered), then she should do so. In the absence of agreement with J and the trustees about this, further discovery might then be sought.
[73] I also consider that at this stage this category of documents should be confined to the period up to July 2009. Property transactions entered into after the date of separation will potentially only be relevant to the extent that they affect the value of the Trust’s assets. Disclosure of the Trust’s financial accounts up to the present date should reflect all material changes in values. If there are particular property transactions where updated valuations are sought, then these might be pursued. But at this stage, discovery of documents in this category beyond separation has not been shown to be reasonably necessary.
Item 5 (land purchases)
[74] The requested discovery under this heading is:
5. All documentation in regard to the purchase and value of any land by [J] or any entity which he is involved in or has an interest in whether beneficial or legal, including [the Trust], since 1998.
[75] This item is the same as item 4, except that it is confined to land. As item 4 will provide discovery of relevant documents in this category, no further discovery is required under this heading.
Item 6 (chattels)
[76] The requested discovery under this heading is:
6. All documents relating to the purchase of chattels used in any of the homes used by the family (including [the identified lower North Island property] and the [identified Sydney apartment]), as at September 2009.
[77] The Family Court Judge did not separately discuss this category of documents, although the order she made encompassed it. J and the trustees object to providing discovery in this category. They say that J has provided any relevant
documents, including the financial statements for the Trust and the 1993 restructuring documents. They submit that it is unduly onerous to require J to produce receipts for every chattel purchased, which are unlikely to exist anyway. They also say that the price at which chattels were purchased is irrelevant, when the relevant valuation dates are the date of separation and the date of hearing.
[78] I agree with J and the trustees that at this stage discovery of this width is not necessary. I understand that P has a concern about the ownership and value of art work in the homes. Discovery relating to the purchase and disposal of any art work during the relationship should be given. If P is able to identify other chattels that were used in the family homes over the period of the relationship, where she has a concern as to who the chattels were purchased by, or as to their value or whereabouts, then further discovery relating to those particular chattels might be pursued.
Item 7 (debt/mortgages)
[79] The requested discovery under this heading is:
7. Any documentation in regard to debts or mortgages owed to [J] or
[the Trust] or the applicant as from 1998 to the present time.
[80] J says that he has provided documents of any debts or mortgages owed at the date of separation. The objection is to documents supporting any such debts and mortgages, and disclosure of debts or mortgages post July 2009. I am uncertain whether the Trust takes the same view, but proceed on the basis that it does.
[81] According to J’s statement of financial position, his principal assets are the debts the Trust and THL owe him. Therefore documentation relating to these debts is an important part of the discovery being sought by P, if she is to obtain an accurate picture of J’s financial position during the relationship and since separation. That was also the view of the Family Court Judge. I consider that there should be discovery of the supporting documents that relate to the debts owed by the Trust and THL to J during the relationship and up to the present time.
[82] Debts or mortgages owed to the Trust, however, should be accurately disclosed in the Trust’s financial statements. Supporting documentation relating to the debts or mortgages appears unnecessary. As with other categories, further discovery can be sought should it become apparent that it is necessary.
Item 8 (tax credits)
[83] The requested discovery under this heading is:
8. All documentation in regard to tax credits held by [J] or any other entities to which he is involved or has an interest whether beneficial or legal as at September 2009.
[84] The Family Court Judge’s view was that J’s tax credits as at the separation date were relevant. She also considered that tax credits held by other entities in which he is involved or has an interest “may be relevant to assessing the overall value of [J’s] and [the Trust’s] interests.”27 Again the error is in not addressing whether such discovery was reasonably necessary.
[85] J does not object to providing J’s tax returns as at 2009, J’s financial statements and the financial statements for any companies where J’s shareholding was acquired during the relationship. He says that any tax credits will be apparent from these documents. The trustees propose that this category be confined to “all documentation in regard to tax credits held by [J] or [the Trust] as at July 2009”.
[86] I agree with the trustees that, at least at this stage, it is not necessary to extend the discovery to all entities in which J has a beneficial or legal interest. Tax credits held by other entities should ultimately be reflected in the financial accounts of the Trust. However the category should extend to tax credits held by TNL as the holding company for all the Trust’s assets. I am told that the date of September 2009 is an error, and that this should refer to July 2009 as the separation date. Discovery should be given as at July 2009, but with the possibility that further discovery
beyond this period may be sought if it is shown to be necessary.
27 At [59].
Item 9 (company current accounts)
[87] The requested discovery under this heading is:
9. Documentation in regard to all current accounts in [J]’s name in any
companies from 1998 to the present time.
[88] The Family Court Judge considered this category to be relevant to assessing the value of the relationship property. I agree that they are relevant either as to the value of relationship property or as to the value of J’s separate property in respect of which P makes claims.
[89] The financial accounts of the Trust, TNL and THL have or will be discovered up to the present date. This will provide details of J’s current accounts in any of those entities over the relevant period. If there are particular transactions for which further discovery is necessary, P should identify those and further discovery might be pursued.
[90] I am unclear whether J has current accounts in any other company. If he does, then they are relevant to the extent that will provide an accurate picture of J’s financial position. Discovery of the financial accounts of any such companies (which should be readily available and not onerous to provide) should be provided up to the present date.
Item 10 (overdrafts/loans)
[91] The requested discovery under this heading is:
10. All documents in regard to any bank overdrafts or term loans held by
[J] or associated entities or [the Trust] as at September 2009.
[92] The Family Court Judge did not give any specific reasons for ordering discovery of this category of documents.
[93] J says that he has provided discovery of any bank overdrafts or term loans in his name at the date of separation. He submits that any further information is unnecessary. The trustees submit that this category should be confined to bank overdrafts or term loans held by J or the Trust as at July 2009.
[94] I agree with the trustees (because the overdrafts and loans will also be disclosed in the discovered financial statements), except that I consider that this should also extend to TNL, as the company through which the Trust holds its investments. As with the other categories, further discovery can be sought if it becomes apparent that it is reasonably necessary.
Item 11 (shares)
[95] The requested discovery under this heading is:
11. Any documents containing any or all of the following information regarding shares acquired by the [J] or [the Trust] from 1998 to the present:
(a) all documents relating to the acquisition of shares by [J]
including the source of any consideration paid; (b) copies of any shareholder agreements;
(c) details of all shareholder loan accounts; (d) most recent property and asset valuations;
(e) financial performance (to profit after tax level);
(f) financial performance (formerly called a profit and loss statement) including any consolidated statement but with results for subsidiaries/divisions also supplied; preferably ensuring that gross profit, depreciation, interest and profit before tax is split out.
[96] The Family Court Judge considered that “the discovery sought here isn’t so wide as to be unreasonable”.28 This was because it was limited to shares acquired by J and the Trust, rather than shares acquired by any of the entities in which J is involved. The Judge did not address why it was necessary to order this discovery when J and the Trust will provide financial statements of J and the Trust.
[97] J says that he has provided discovery of assets acquired by him during the relationship, and financial statements for any shareholdings acquired during the relationship. He says that the rest of the information sought is irrelevant and
unnecessary at this stage. The trustees do not object to this category of documents in
28 At [62].
so far as it relates to the Trust. They object to it if it is intended to include shares held by TNL.
[98] The shares acquired by TNL are potentially relevant to TNL’s assets and, in turn, the Trust’s assets. That asset position will be disclosed in TNL’s financial statements which are to be discovered, as are the financial statements of J and the Trust. The discovery sought seems directed to obtaining underlying documentation from which an assessment might be made of the future performance of investments. There may be other reasons why the documentation is being sought, but it is unclear to me at this stage what those reasons are other than that it will enable some sort of forensic accounting analysis to be carried out.
[99] I consider that discovery of these documents should be confined to item 11(a) and for the period from March 1998 to July 2009. If further discovery beyond that is sought, there will need to be a basis put forward as to why that is reasonably necessary.
Item 12 (disposition to third parties)
[100] The requested discovery under this heading is:
[101] The Family Court Judge dealt with this item together with items 13 to 16. She considered these documents were relevant to P’s claims and to enable P’s counsel to advise her on her constructive trust claim.
[102] J objects to this category of documents on the grounds that it is vague, irrelevant and oppressive. The trustees do not object except to the extent that it extends beyond July 2009.
[103] Documents in this category are relevant to P’s claim under s 44. However, I agree with J that, as sought, this category is vague and potentially very wide (and therefore oppressive). P’s principal interest is in any dispositions of relationship property. The request should at least be narrowed to the period of the relationship.
However, even then, the request remains wide and vague. A possible way of narrowing the request is to seek discovery of dispositions that are over a specified monetary value and which are not within any of the other categories. I leave this to counsel to agree on some sensible description that will ensure discovery of dispositions during the relationship which P may contend were dispositions of relationship property. Once P has reviewed the discovery provided, and if she has concerns about any potentially relevant dispositions made by J of his separate property, she may seek further discovery of those items if that appears to be necessary.
Item 13 (disposition to trusts)
[104] The requested discovery under this heading is:
13. All documents containing information on disposition by [J], the applicant or both of them to any trust from 1998 to present.
[105] J’s objection is the same as for item 12. The trustees’ objection is to discovery beyond July 2009. These documents are sought in relation to P’s claim under s 44C. I consider that dispositions made by J or P to any trust during the period of the relationship is potentially relevant and should be discovered. Further discovery might be sought after July 2009 if it appears to be necessary in respect of any particular matter once the discovery already provided has been reviewed.
Item 14 (disposition to qualifying trusts))
[106] The requested discovery under this heading is:
14. All documents containing information on disposition by [J], the applicant or both of them to any qualifying trust from 1998 to present.
[107] J’s and the trustees’ objection to this item is the same as for item 3. This category of documents appears to be seeking documents that may be relevant to a claim under s 44F. I therefore wonder if “qualifying trust” is meant to refer to a “qualifying company”. I consider that dispositions made by J or P to any qualifying company during the relationship are relevant and should be discovered. Once that
discovery has been reviewed, further discovery might be sought after July 2009 if it appears to be necessary in respect of any particular disposition.
Item 15 (trust documents)
[108] The requested discovery under this heading is:
15. In regard to all trusts or other settlements made on [J], by [J] or in which [J] has any interest whatsoever (whether beneficial or legal and whether discretionary, fixed or vested) from 1998 to the present:
(a) Copies of all trust deeds and any deeds of variation.
(b) Copies of all deeds appointing all previous and present trustees.
(c) Full details of the amount and stated property of each trust including all documents relating to the assets of the trust or trusts and the trustees’ actions in relation to those assets;
(d) Financial statements for the years from the establishment of any family trusts from 1998 onwards through to the present time including full details of payments made to any beneficiaries of the trusts during this time;
(e) Copies of all letters, memorandum of wishes or any other communications by the settlers/beneficiaries of each of the trusts to the trustees of each of the trusts;
(f) All correspondence between [J] and the settlors of any trust; (g) All correspondence between [J] and the trustee(s) of any
trust.
[109] The Judge viewed these documents as relevant. She did not address whether discovery of them was reasonably necessary and she did not specifically discuss the items at (e) to (g).
[110] J says that he has provided any relevant documents for any property acquired by him during the relationship. He has also provided all relevant documents relating to his interest in the Trust. He says that any further information is irrelevant and unnecessary. I am unclear from that submission which of the above items J has or has not provided. The trustees submit that discovery should be confined to items (a), (b) and (c) in relation to the Trust, and that discovery of those items should extend only up to July 2009.
[111] I consider that discovery items (a), (b) and (c) should be discovered for J and the Trust, as should the financial statements of any family trusts established by J or the Trust during that period. Payments made to discretionary beneficiaries will be disclosed in the annual accounts, which makes discovery of “full details of payments made to any beneficiaries of the trusts during this time” redundant. P has not explained how the items at (e) to (g) are either relevant or necessary at this stage.
Item 16 (trust structure)
[112] The requested discovery under this heading is:
16. Any other documents not already included in the above documents which relate to the structure of the trusts.
[113] J says this request is too vague. The trustees also object to it. I agree that the key documents are those to be discovered under item 15. In the absence of any detail about what is sought under this category, which will not be covered by discovery under item 15, and why that documentation will be relevant to P’s claim, I consider that it should not be ordered at this stage.
Item 17 (work for trusts)
[114] The requested discovery under this heading is:
17. All documents relating to or evidencing work done by the applicant or [J] carried out for [the Trust] or entities associated with or owned by [the Trust].
[115] The Family Court Judge said that all documents relevant to assessing a potential constructive trust claim are relevant and should be discovered. J says this request is too vague. The trustees do not object to discovery of this category of documents. I agree that documents in this category are relevant and should be discovered. If J has concerns about the nature of documents sought under this category, it can be the subject of discussion/agreement between P and J’s legal advisors.
Item 18 (alternative separation date)
[116] The requested discovery under this heading is:
18. If [J] contends for a separation date which is different from September 2009 then the same documents in regard to that alternative separation date mirroring the documents listed above are also requested.
[117] I understand that July 2009 is the agreed separation date. If it is not, then where discovery has been ordered up to July 2009, it should also be provided up to any alternative separation date.
Overall approach
[118] If the parties are unclear as to what is to be discovered under any item, I expect that discussions between counsel will be able to resolve any ambiguity, consistent with the views I have expressed. The overall intention is to strike a balance between transparency and proportionality, and for there to be discovery of all documents that are central to obtaining an accurate picture of the relationship property, J’s separate property and the assets of the Trust. Once that discovery has been reviewed, further discovery may be needed in respect of particular matters.
Affidavit objections
[119] J applied to strike out parts of P’s affidavit in March 2012. He succeeded in part. He appeals against the Judge’s decision to provisionally admit some of the evidence to which he had objected.
[120] The relevant parts of the Judge’s decision are as follows:29
The opposition that has been raised to the narrative affidavit concerns allegations regarding aspects of [J’s] conduct during the relationship which Ms Ambler submits are designed to portray him in a bad light and are extremely prejudicial to him. In addition opposition is made to evidence of how the relationship came to an end in particular evidence of an alleged affair that [J] had with the couple’s maid. Evidence of relationship matters such as [J’s] health, alleged mental and physical abuse, and the affair are not relevant to the financial issues that have to be determined in these proceedings.
29 [P] v [J], above n 1, at [88], [93] and [95]-[98].
...
I accept the submission that the Court must be cautious about allowing in evidence that may be only of marginal relevance to the central issues in the case, particularly where it is evidence that could unnecessarily prolong the proceedings by requiring evidence in response to contentious and possibly sensitive issues. However because the applicant’s case is that her contributions have to be assessed in the light of difficulties faced in the relationship I do not find that I can treat that evidence as irrelevant. The preferable course in my view is to order that the evidence should remain, but only provisionally on the basis that it may be of relevance to the parties’ contributions, or to maintenance, but with leave to revisit the issue before trial when the issues are more clearly defined.
...
The evidence here complained of refers to the applicant’s discovery of [J’s] affair, the way in which the relationship came to an end and the effect on the applicant. Some of this evidence is hearsay, and opinion evidence, but it is evidence that a Judge at trial would be able to assess as to what weight it should have.
Its primary relevance would seem to be in regard to her applications for interim maintenance, interim distribution and orders that the respondent pay her legal and accounting fees.
In these circumstances I find that this is evidence that may be of little relevance by the time the proceedings come to trial but of relevance to the interim applications.
This is evidence that should be admitted on a provisional basis.
[121] J contends that the Judge erred in her assessment of the potential relevance of the evidence. J also contends that the Judge erred in admitting the evidence on a provisional basis.
[122] The Judge, however, has explained why she regards the evidence as possibly of relevance. The Judge’s decision reflects the difficulty there can be in making premature decisions on relevance. She was prepared to rule out a number of paragraphs as irrelevant, but others she was not prepared to find were irrelevant at this stage. She made no error of principle in proceeding in this way.
[123] More importantly, I consider that the appeal on these matters will be overtaken by the events at or before trial. At this stage the Judge has made a provisional ruling. She has therefore indicated that her ruling may change. Once the issues have been more refined the issue can be revisited. J might reserve his
response until the issue comes to be revisited, and respond to the points if and when his advisors consider that he needs to do so. J is not prejudiced by the Judge’s decision not to strike out this evidence at this point so as to warrant an appeal on this matter.
Result
[124] The appeal in respect of the discovery orders is allowed in part. The appeal in respect of the refusal to strike out evidence is dismissed. My preliminary view is that as each party has been successful in part, costs on these appeals should lie where they fall. If any party takes a different view to that preliminary view, short memoranda (limited to no more than three pages) may be filed within one month of today’s date.
Mallon J
Solicitors:
Simpson Grierson, Auckland
Keesing McLeod, Lower Hutt
Keegan Alexander, Auckland
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URL: http://www.nzlii.org/nz/cases/NZHC/2013/557.html